Morgan Stanley upgrades Charles River, downgrades IQVIA on diverging CRO outlooks

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Morgan Stanley upgraded Charles River Laboratories to Overweight and downgraded IQVIA Holdings to Equal-weight on Wednesday, June 17. The bank raised its Charles River price target to $220 from $185, citing increased biopharma funding that benefits the company's higher exposure to small and mid-sized biotech clients, which account for 40% to 45% of its revenue. IQVIA's target was cut to $200 from $225, with Morgan Stanley flagging a risk that pharmaceutical companies could move about 30% of typical trial costs in-house using artificial intelligence, reducing demand for its services. The downgrade also noted that much of IQVIA's earnings growth since 2022 has come from stock buybacks rather than faster sales. In a related transaction, IQVIA is buying European drug discovery assets from Charles River for roughly $145 million in cash, a deal expected to close this quarter.

Impact on stocks 3

Biotech & Genomic Medicine± Mixed · 2 stocks
Charles River Laboratories
CRL
▲ PositiveCapitalrelevance

Morgan Stanley upgraded Charles River to Overweight and raised price target, citing increased biopharma funding benefiting its small/mid biotech exposure.

IQVIA Holdings Inc
IQV
▼ NegativeCapitalrelevance

Morgan Stanley downgraded IQVIA to Equal-weight and cut price target, citing risk of pharma moving trials in-house via AI and earnings growth from buybacks.

Financials · 1 stocks

Theme Impact 2

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